Source: Solitaire Townsend from Forbes
“Do I think Tyson and its executives are the enemy, because they have a radically different view of our relationship to animals? I don’t.”
So writes Ethan Brown, the passionate founder of BeyondMeat, on the company’s website. Brown is defending his sale of a 5% stake in his 100% vegetable protein start-up to the megalith Tyson Foods, the words largest meat producer.
BeyondMeat isn’t coy about its mission to “perfectly replace animal protein with plant protein”. Which means Tyson has bought into a company dedicated to totally disrupting their current cash cow (no pun intended). Even a decade ago BeyondMeat’s vocal consumer base would have a right to be worried. From Kodak holding back the digital photography they invented, to the long and inglorious story of automobile companies undermining electric cars. Killing your competition was basic good business.
Until now. Earlier this year the world’s 4th-ranked international oil and gas company, Total, took a 23% stake in EREN Renewable Energy. Danone, the producer of fresh milk and dairy products, acquired WhiteWave, producer of Alpro and other milk alternatives. Avis bought Zipcar.
So what’s going on? Large companies are acquiring and investing in potentially ‘extinction causing’ level disruptors. Some of the investment targets have the explicit purpose of eradicating their new suitor’s business models. But there is also something special about these relationships. In each case the large company is backing a radically more environmentally or socially sustainable version of their main project lines.
I call this phenomenon ‘life-boating’. Every business leader today knows that we’re facing a transformational multi-factor event horizon. Climate change, millennial preference shift, digitization, resource volatility and product to service innovation are converging. Collectively they are a threatening iceberg heading towards some Titanic sized companies – especially those in FMCG, transport and energy. Many large businesses are busy responding by cutting calories or carbon, encouraging ‘sustainable innovation’ and seeking more purposeful products.
But a Titanic takes a while to move, and many of the factors may start to bite, hard, before the internal sustainability initiatives create enough traction. And when you’re heading towards an iceberg, it’s a good idea to have robust, swift and fully-functioning lifeboat. Hence the growing investments and M&A in sustainability-focussed start-ups.
The benefits of life-boating aren’t only in owning the future, but in building relevance today. Many sustainability businesses are millennial friendly, purposeful, digital and entrepreneurial. They fulfill every modern buzzword in business. From high-quality recruitment, succession planning, innovation and consumer insight – these lifeboats bring immediate value. They work hard for their new investors in both the long and short term. It just takes some guts (or humility) to see past their threat to the opportunity they present.
If you’re currently sitting on a Titanic without a lifeboat, here are the three qualities you should be looking to acquire:
- Lifeboats are super-sustainable. The point of a lifeboat is to be transformatively sustainable and future-proofed, especially when compared to your mainstream products. In many cases that will mean a dramatically less ‘per unit’ carbon footprint, or a radically improved health/social benefit (think Kellogg’s recent purchase of RXBars whose ingredient list concludes with ‘no bad stuff’).
- Lifeboats serve new tastes. Your lifeboat should have a fresher coat of paint than you do, and more perfectly meet changing consumer tastes. Be it in purposeful tone and marketing, digital distribution, new business model or Gen-z friendly product proposition. Your lifeboat should be designed for the 21st Century (rather than trying to adapt to it).
- Lifeboats should grow, fast. Ideally, your lifeboat should be the leading potential disruptor in your market – the biggest fish in a small pond. Remember, you aren’t the only Titanic out there. Your mainstream competitors are also heading towards the iceberg and so, you want the fastest, smartest and most disruptive lifeboat around. Remember, it will be just as competitive (if not more so) past the iceberg as it was heading towards it. Think scalability.
If you still can’t find a lifeboat, then think laterally. What innovations in your category have the circular economy built in, aren’t just low carbon but actually made out of fugitive carbon, offer a genuinely healthy experience compared to your current claims? Or even better, what start-ups are attacking your right to exist, condemning your products and trying to convince consumers to drop your product categories altogether? These biggest critics might be your future lifeboat.
In 2018, I expect life-boating to grow. A bottled water company should snap-up Brita. Mars should buy Snact. Gucci should take a stake in RenttheRunway. LeasePlan should think laterally and acquire Webex. And learning from Tyson, McDonalds should invest in The Impossible Burger.
Of course, there is another option.
Wait until the iceberg hits and watch as today’s lifeboats start buying up what’s left of yesterday’s Titanic’s.